In this article you’ll find all the preliminary information that you need to open a company in Singapore. We wrote it in collaboration with the agency that we recommend for opening your company. Here what you’ll learn:
The pros of opening a company in Singapore
Singapore is a safe, pro-business environment that supported by a well-respected government with transparent and consistent policies that protect companies physical and IP investments.
There is minimum red-tape for doing business in Singapore and is one of the top least corrupt countries in the world. It is also a well-developed infrastructure that meets all the needs of business industry and is ranked as one of the top countries in the world for its infrastructure capabilities.
Singapore is an ideal location for global businesses to site their headquarters. Strong trade and investment makes Singapore one of the most competitive Asian countries and one of the world’s easiest place to do business.
By situating your international headquarters in Singapore, your company will benefits from the following advantages:
- Singapore has low corporate tax rate compared to other leading economies in the world. A company is taxed at a flat rate on its chargeable income and with effective from year 2009 (YA 2010) onwards, the corporate tax has been reduced to 17%. Also, capital gains are not taxable in Singapore;
- All Singapore-based start-ups that qualify for full tax exemption scheme of Singapore tax – ask to your agency for the specific conditions needed for qualifying – won’t pay any tax on the first $100,000 of taxable income for first three years and 50% of the current corporate tax rate for the next $200,000 of taxable income.
- Singapore’s network of over 50 comprehensive Double Taxation Avoidance Agreements;
- Singapore’s many free trade agreements and the Investment Guarantee Agreements;
- Protection for your ideas and innovations thanks to Singapore’s strict enforcement of its strong intellectual property laws;
- Financial assistance from the government has rolled out numbers of initiatives and programs to enable new entrepreneurs to gain access to capital or funding. These funding initiatives include cash grants; government-aided equity financing schemes, business incubator schemes, debt financing schemes. Start-up can raise their funding through programs like ACE Start-ups scheme, iStart- ACE Scheme and iSPRINT;
The cons of opening a company in Singapore
Singapore has been steering its local workforce towards higher value occupations like finance, biochemistry and industrial engineering through education and propaganda. This creates a restricted labour pool in the hospitality, F&B, tourism and retail sector.
The only way to fill this void is to accept an influx of immigrants willing to work such positions. Simple supply and demand and thus result in higher foreign worker levies and quotas, thereby increasing the cost of labour for small businesses.
In addition to high labour costs as highlighted above, land costs in Singapore is high due to very limited country size and strategic port location. It is expensive to buy as well as rent land space in Singapore.
Renting an office, building a semi-conductor factory or even renting a retail shop space can be costly as much compared to neighbouring Asian countries.
Singapore does not have natural resources and depend intensively on importing of raw materials and ready made products from other countries. This eventually, brings up living costs and cost of goods sold thus contributing to overall costs.
How to open an Singapore a company without living or even go there
All Singapore company incorporation formalities (as well as work permit formalities, if applicable) can be handled without you having to visit Singapore. You just need to engage a professional agency and discuss all the details by email or phone with them and send all the necessary documents (see below for details) via email and pay by PayPal or bank transfer.
You can then receive the final documents at any place and send back the original signed documents by any international courier service to the agency.
The only exception case that you may need to visit Singapore will be the opening a bank account, depending on the bank you choose.
Foreigners who wish to incorporate a Singapore company, may take into consideration of the following points:
- You must engage a professional agency to register a Singapore company as Singapore law does not allow foreign individual or entities to self- register a company;
- There is no requirement for you to obtain any special Singapore visa if you just merely want to incorporate a private limited company but have no intention or plan to relocate to Singapore. You are free to operate your company from overseas as well as free to visit Singapore on a visitor visa whenever you are required to attend to any company matters on short-term basis. However you must keep in mind that in such circumstances, you will need to find a local director since it is mandatory that each company must have at least one local director. Most of the professional agencies offering Singapore incorporation services often offer the services of a nominee local resident director for this purpose;
- If you plan to relocate to Singapore to operate your company, you are required to obtain an Employment Pass or Entrepreneur Pass type of work pass. Once you have obtained your work pass, you can act as the local resident director of your company.
All the documents you need to register a company in Singapore and the procedure for opening it
The procedures for register a company in Singapore is the following:
- Pay the incorporation fee to the professional agency;
- Choose a name for your new company;
- The agency will check the name availability in Singapore;
- Provide your passport copy, official copy of your residential address proof (for example, utilities bill) and filled up a questionnaire form with standard questions such as your address, passport number and name of directors and shareholders (if you plan to open the company alone, you can be sole director and shareholder);
- For simple company structure, which unless you have special requirements, the above mentioned required documents shall be suffice for your agency to prepare the necessary company incorporation paperwork and send to you via email for signature.
- Upon receipt all the original signed incorporation documents including the notarized passport copy and residential address proof via international courier service, the agency will proceed to incorporate the company online;
- The timeline for the whole process of incorporation (from collecting documents until online incorporation) should be approximately 5 working days.
The total cost of registering and maintaining a company in Singapore
First of all, choose a Singapore company formation package:
Local Entrepreneur: This package is suitable for entrepreneurs who wish to setup a Singapore company and have their own local Singapore Director.
Foreign Entrepreneur Without Relocation: This package is suitable for foreign entrepreneurs who wish to setup a Singapore offshore company but don’t plan to relocate to Singapore.
Foreign Entrepreneur With Employment Pass: This package is suitable for foreign entrepreneurs or professionals who wish to form a Singapore company and relocate to Singapore to run their company operations. You must have a degree and/or relevant working experience to setting up business and apply for the employment pass.
For client who will like to engage nominee director services, it is very important to appoint a competent person to act as your local director of your Singapore company. A wrong choice in the appointment may bring dire consequences to the company. Most of the professional agencies offering Singapore incorporation services often offer the services of a nominee local resident director as well.
Below you find the package fees for Singapore Company Incorporation / Singapore Subsidiary Incorporation (in Singapore Dollars, SGD).
Note that, at the moment of writing this article, 1 USD is worth around 1.4 SGD.
Also, note that the acronym “W/GST” in the table mean the price inclusive of Goods and Services Tax of 7%, which must be collected on behalf of the Singapore Government.
Here the package fees:
|Package||Local Entrepreneur Fee (SGD)||Foreign Entrepreneur Without Relocation Fee (SGD)||Foreign Entrepreneur With Employment Pass Fee (SGD)|
|Company Incorporation Services||$900 (W/GST $963)||$900 (W/GST $963)||$900 (W/GST $963)|
|Company Secretary (per annum)||$800 (W/GST $856)||$800 (W/GST $856)||$800 (W/GST $856)|
|Registered Office Address (per annum)||$500 (W/GST $535)*||$500 (W/GST $535)*||$500 (W/GST $535)*|
|Opening of Singapore bank account||Free (for the first bank)||Free (for the first bank)||Free (for the first bank)|
|Nominee Director (per annum)||Not applicable||$1,500 (W/GST $1,605)||Temporary –|
$375 (W/GST $401.25) for 3 months
|Refundable Deposit||Not applicable||$1,800||$1,800|
|Employment Pass||Not applicable||Not applicable||$2,500 (W/GST $2,675)|
|TOTAL COMPANY SETUP COST (including nominee director security deposit)||$2,200 (W/GST $2,354)||$5,500 (W/GST $5,759)||$6,875 (W/GST $7,230.25)|
*If you can provide a local Singapore address as the registered address of the company, the fee will not be applicable for the local entrepreneur package.
Here the maintenance costs for Singapore Company from second year onwards
|Description||Local Entrepreneur Fee (SGD)||Foreign Entrepreneur Without Relocation Fee (SGD)|
|Provision of Company Secretary (per annum)||$800 (W/GST $856)||$800 (W/GST $856)|
|Provision of Registered Office Address (per annum)||$500 (W/GST $535)*||$500 (W/GST $535)*|
|Nominee Director (per annum)||Not applicable||$1,500 (W/GST $1,605)|
|Annual Return Filing Fee||$60.00||$60.00|
|TOTAL MAINTENANCE COSTS (excluding out of pocket Expenses)||$1,360 (W/GST $1,451)||$2,860 (W/GST $3,056)|
* If you can provide a local Singapore address as the registered address of the company, the fee will not be applicable for the local entrepreneur package.
Beside this, a Singapore Company is required to prepare management accounts and submit audited report (certain companies status are exempted from audit, check with your agency) to the Inland Revenue Authority of Singapore (IRAS) once a year.
The first tax return will be issued by IRAS within 18 months of incorporation. A decent agency will also offer you an accounting, auditing and taxation services. This does not come for free and prices may vary as they are based on the number of invoices you produce.
You can easily get the quotation from your agency, agreed to the price, make your payment and email all your business transaction documents to the agency. The agency accountant will take care all the accounting work, arrangement for the audit and tax filing for you.
How to open a multi-currencies business bank account in Singapore
Singapore is one of the members of the Financial Action Task Force. Therefore, all Singapore banks must follow certain regulations in line with the international standards of risk management.
Hence, before accepting you as a customer, every bank has the obligation to conduct the due diligence by collecting certain documents in order to comply with anti-money laundering laws.
From a practical point of view, if you are a fresh businessman (that is, you have never had a business before), you’ll need to provide the following documents (in English) as business proof in order to open a business bank account in Singapore:
- Personal Bank Reference Letter;
- Previous/existing Employment contract;
- Previous/existing company business card;
- Working Attestation issued by previous company;
- Professional Certificate in related industry;
- Personal CV/Resume.
On the other hand, if you already run a business, you’ll need to provide the following documents (in English) as business proof:
- Certificate of Incorporation;
- Business Registration Certificate;
- Business Card;
- Most recently filed annual tax return;
- Trading history, such as agreement copies (both buyers and sellers), purchase order copies, sales confirmation copies and so on.
Furthermore, you will need to write a business plan (your agency may assist you to prepare it if you do not have previous experience). Generally speaking, the business plan does not need to be too detailed, but you do need to provide a direction for your business (what services you intend to offer, in which countries you intend to operate and so on).
In order to open the bank account, you will have to visit Singapore to meet up with the banker. However, for a small fee (500 SGD), your agency can assist to make meeting reservation with banker and bank account opening process can easily settle within one day.
Just remember to bring along your passport, residential address proof and cash for initial deposit.
Finally, it is also possible to open an off-shore bank account (for instance in Switzerland) without visiting Singapore. I recommend you to discuss these details with your agency as choosing the right bank is extremely important.
Are you looking for an agency that can help you to set up your Singapore company?
If you want to have the contact information of an honest agency that can help you to register and manage your company, just send us a message using the following form:
p.s. Note that we receive hundreds of emails every day and, sometimes, we can’t reply fast. At the same time, we assume that you want to get this info ASAP, so we’ll also forward your message to the agency we recommend. In this way they can get in touch with you much faster!
[Photo Credits (Creative Commons License): www.flickr.com/photos/chanc/]